Taken 3 hours ago.......Kagara has bought itself more time to...

Taken 3 hours ago.......

Kagara has bought itself more time to secure a funding lifeline to keep administrators at bay, placing its shares into suspension after failing to meet yesterday's deadline.

It was unclear last night whether Kagara would be in a position to update investors today or whether they faced a tense weekend wait, with the board understood to be in talks over several options.

According to the miner's request for a suspension it expects to make an announcement about funding on or before Monday. However, under Australian Securities Exchange rules it could still opt for a further suspension from trading.

Kagara shares, which have not traded since last week, last changed hands at 12¢ - 13¢ below its 1999 float price of 25¢. That values the company, once worth nearly $1.5 billion at its 2006 peak, at just $95 million.

The value of the stake held by Kim Robinson, Kagara's former chairman turned non-executive director and still its biggest individual investor, with 3.2 per cent, was once worth close to $130 million but was yesterday valued at $2.8 million.

The core of Kagara's woes is that its Queensland operations are struggling to make money at current zinc and copper prices of $US2005 ($1931) a tonne and $US8205/t respectively.

Kagara shut down its last operating mine, Balcooma in Queensland, on Monday to conserve cash, leaving processing of ore stockpiles as its only source of income.

The Kagara board, headed by former Newcrest Mining executive Geoff Day, has spent the week considering its options, including asset sales and debt and equity funding.

_WestBusiness _ understands talks have been held with 19.9 per cent shareholder Guangdong Foreign Trade Group but it is unclear what role the Chinese company could play in a possible refinancing.

When Mr Day last spoke publicly on Sunday he signalled Kagara was chasing up to $50 million but that was before the closure of Balcooma.

At December 31 Kagara had $36.6 million in cash and cash equivalents and $23.8 million in trade receivables. However, of that $36.6 million, $25.8 million was consolidated from spin-off Mungana Goldmines, meaning the company itself had just $10.8 million.

Liabilities included $66.3 million debt maturing in the next year and $53.6 million of trade payables owed. Of the $68 million pocketed from the sale of its WA nickel mine Lounge Lizard to Western Areas, some has been used to pay off the principal of a $40 million working capital.